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Is the Real Estate Market looking like it did back in the 1980s?

February 16, 2017 - Updated: February 16, 2017

Economist says it’s 1980s all over again in the Toronto market.

 

 

Bank of Montreal economist Doug Porter says Toronto is the midst of a housing bubble, comparing the market to “frothy” levels not seen since the 1980s.

 

“There’s nothing tentative about the red-hot housing market in Toronto and neighbouring areas,” said Porter, in a note out Monday, referring to the 22 per cent price appreciation of existing homes. “An apparent influx of foreign wealth, coupled with record-high demand and a shortage of detached properties, are driving the frothiest price increases since the late 1980s. Prices are even accelerating in segments and areas without shortages.”

 

The economist is now predicting a 19 per cent increase in condo prices in the Greater Toronto Area and says to watch for double-digit gains in the Greater Golden Horseshoe. Basically anywhere with a two-hour drive  —  Niagara, Hamilton, Brantford, Guelph — should see a boost in prices.

 

“Admittedly, condo supplies in the GTA are down sharply from prior elevated levels, but a record number of units are now under construction…so why the froth?” asks Porter in his note titled “Look Up in the Sky: It’s a Bird, It’s a Plane…It’s a Toronto Housing Bubble.

 

He notes the rest of the country looks boring next to Toronto although firmer price gains are being recorded in Montreal and Ottawa after a lengthy period of stagnation. He said Alberta is also stabilizing.

 

Porter predicts “some further softening in Vancouver’s prices” after 33 per cent year over year gains in prices prior to the province imposing a 15 per cent property land transfer tax on foreign buyers in the city. “Many of whom have turned tail and are looking elsewhere,” said the economist.

 

The economist’s thoughts came out on the same day the Canadian Real Estate Association released its monthly numbers for January, showing sales across the country up 1.9 per cent from a year ago but down 1.3 per cent from December on a seasonally adjusted basis.

 

Home sales nationally are at the second lowest monthly level since the fall of 2015 and only slightly above levels recorded last November when recently tightened mortgage regulations came into effect. “Sales activity was down from the previous month in about half of all local markets, led by three of Canada’s largest urban centres: the GTA, Greater Vancouver and Montreal,” said the Ottawa-based group which represents about 100 boards across the country.

 

The actual national average price for homes sold in January 2017 was $470,253, up only 0.2 per cent from a year ago and carried by activity in Toronto and Vancouver, although the latter’s share of national sales activity has diminished considerably over the past year and given it less upward influence on the national average price.

 

Without Greater Toronto and Greater Vancouver, the average price of a home in the country is reduced by almost $120,000 to $351,998.

 

“Canadian homebuyers face some challenges this year, including new mortgage rules that make it harder to qualify for a mortgage and regulatory changes that will push up mortgage financing costs,” said Cliff Iverson, president of CREA. “It will take some time to gauge the extent to which these challenges will weigh on home buyers in different housing markets across Canada.”

 

Visit us at Durham Bungalows.ca for all your Real Estate needs!

 

Source: http://www.msn.com/en-ca/money/homeandproperty/economist-says-it%E2%80%99s-1980s-all-over-again-in-the-toronto-market-remember-how-that-ended/ar-AAmYO6P?li=AAadgLE&ocid=spartandhp


Tagged with: real estate bubble 1980
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